Bain Capital

Republican presidential nominee Mitt Romney used a loophole to “rent” the Mormon church’s tax exemption status and defer paying taxes for 15 years, according to a new report.

Tax returns obtained by Bloomberg News through a Freedom of Information Act request indicated that Romney set up a charitable remainder unitrust (CRUT) in June 1996 just before Congress cracked down on the loophole in 1997.

“In this instance, Romney used the tax-exempt status of a charity — the Mormon Church, according to a 2007 filing — to defer taxes for more than 15 years,” Bloomberg’s Jesse Drucker explained. “At the same time he is benefitting, the trust will probably leave the church with less than what current law requires.”

Estates lawyer Jonathan Blattmachr told Bloomberg that Romney’s trust benefits from the Mormon church’s exempt status because charities don’t pay capital gains taxes when they make a profit from the sale of assets.

“The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation,” Blattmachr said, adding that the charitable contribution “is just a throwaway” and the church would receive little if any financial benefit from the trust.

“I used to structure them so the value dedicated to charity was as close to zero as possible without being zero,” he pointed out.

The CRUT allows individuals to “defer capital gains taxes on any profit from the sale of the assets, and receive a small upfront charitable deduction and a stream of yearly cash payments,” Drucker wrote. “Like an individual retirement account, the trust allows money to grow tax deferred, while like an annuity it also pays Romney a steady income. After the funder’s death, the trust’s remaining assets go to a designated charity.”

In fact, the amount available to go to the Mormon church has decreased from at least $750,000 in 2001 to $421,203 at the end of 2011 as Romney has collected yearly cash payments from the trust.

The Romney campaign declined to answer questions about the trust but insisted that it was “operated in accordance with the law” in an email to Bloomberg.

“You might not be ready for diplomacy with Beijing if you can’t visit the Olympics without insulting our closest ally,” said Obama, referring to the British taking offense to Republican challenger Mitt Romney’s assessment of the Summer Olympics.

“All they have to offer is the same prescription they’ve had for the last thirty years: Have a surplus? Try a tax cut. Deficit too high? Try another. Feel a cold coming on? Take two tax cuts, roll back some regulations, and call us in the morning!”

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VICE PRESIDENT JOE BIDEN:

“Folks, the Bain way may bring your firm the highest profits,” Biden said, referring to private equity firm Bain Capital, which Romney co-founded and served as CEO. “But it’s not the way to lead our country from the highest office.”

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SEN. JOHN KERRY:

“Ask Osama bin Laden if he is better off now than he was four years ago.”

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FORMER PRESIDENT BILL CLINTON:

“In Tampa, the Republican argument against the president’s re-election was pretty simple: ‘We left him a total mess, he hasn’t cleaned it up fast enough, so fire him and put us back in.’ ”

“It takes some brass to attack a guy for doing what you did,” Clinton said, describing Republican vice presidential nominee Paul Ryan’s criticism of Obama’s cuts in the Medicare health program for seniors – the same cuts Ryan offered in his own budget.

“President Obama started with a much weaker economy than I did. No president – not me or any of my predecessors could have fully repaired all the damage he found in just four years. But conditions are improving and if you’ll renew the President’s contract you will feel it. … I believe that with all my heart.”

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FIRST LADY MICHELLE OBAMA:

“I have seen firsthand that being president doesn’t change who you are – it reveals who you are.”

I never read RS in the 70’s, 80’s or 90’s. However, that has changed. I discovered that their political reports are informative and quite revealing in a way that mainstream (read… corporate) media avoids.

Editor’s note: The following is a transcript of a Democracy Now! interview with Rolling Stone contributing editor Matt Taibbi, whose recent article in the magazine gets to the bottom of Mitt Romney’s enormous wealth.

A new article by reporter Matt Taibbi in Rolling Stonesheds light on the origin of his fortune, revealing how Romney’s former firm, Bain Capital, used private equity to raise money to conduct corporate raids. Matt Taibbi writes, quote, “what most voters don’t know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America’s top political journalists for two consecutive presidential campaigns: Mitt Romney is one of the greatest and most irresponsible debt creators of all time,” Taibbi writes. He goes on to say, “In the past few decades, in fact, Romney has piled more debt onto more unsuspecting companies, written more gigantic checks that other people have to cover, than perhaps all but a handful of people on [planet] Earth.”

Well, Matt Taibbi joins us now, contributing editor for Rolling Stone magazine. His most recent in-depth piece called “Greed and Debt: The True Story of Mitt Romney and Bain Capital,” author of the book also, Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History.

Former Republican presidential candidate Michele Bachmann is encouraging voters to support Mitt Romney because President Barack Obama is “extremely wealthy” and can’t relate to the “common man.”

USA Todaycaught up with Bachmann at the Republican National Convention earlier this week and asked her how someone with “vast wealth” like Romney could “connect with the American public, really understand what the plight of the American public?”

“Well, President Obama is extremely wealthy,” Bachmann replied. “He and his wife have been wealthy for a number of years, and so I think that’s really the issue. Obama is wealthy, what do, or — what does he understand about the common man right now?”

“And I think what people care about is not hating someone for what their assets are — the American people don’t hate President Obama because he’s a very wealthy individual,” she added.

“What they care about is how their lives are, would their lives be better? And I think it’s very clear under the Romney-Ryan ticket the average Americans’ lives will be much better, they’ll have a lot more money to spend in the way that they want, and they’ll also have a much more secure future for their children.”

In late 2011, New York magazine determined that Obama had a net wealth of about $7.3 million, thanks to his successful books and his presidential salary of $395,188.

Romney, however, had net worth as much 136 times greater than the current president. The Republican candidate has personally estimated his wealth to be between $190 and $250 million. But former Massachusetts State Democrat Party chairman Phil Johnston believes that the number is closer to $500 million and Romney’s close friend, Hugh Hewitt, has speculated that the former Bain Capital CEO could be worth $1 billion.

President Barack Obama is leading Mitt Romney by 7 points among registered voters — 52 percent to 45 percent — in a just-released CNN/ORC International poll.

The margin echoes those of other polls released in recent days, and suggests that the barrage of tough advertisements against the presumptive Republican nominee has taken a toll. As CNN notes:

While Romney’s favorable rating has remained steady (47% now compared to 48% in July), his unfavorable rating has jumped from 42% last month to 48% now … Among independents, the poll indicates Romney’s image has taken a beating. In May, only 40% of independents had an unfavorable view of Romney. Now, 52% of independents have a negative view of him.

These polls are, of course, just snapshots in time. But they underscore the problem that Romney’s campaign now has on its hands. His image among the public has been largely defined by his opponent. And while Romney has plenty of cash to run ads of his own, time is running out for him to reverse this trend.

Take, for example, the following findings within the poll:

Sixty-four percent of all Americans, and 68% of independents, think Romney favors the rich over the middle class. And 63% of the public thinks Romney should release more tax returns than he has already made public, a figure which rises to 67% among independents.

UPDATE: 6:15 p.m. — The recent trend of generally good news for the president continued on Thursday afternoon, with the release of a new poll by Fox News that showed Obama besting Romney by a 49 to 40 percent margin among registered voters. His lead has increased since last month’s poll, when he enjoyed a 45 to 41 percent margin.

As with the CNN poll, the primary factor appears to be the barrage of negative ads directed Romney’s way.

The Obama campaign has spent heavily on advertising attacking Romney’s time at Bain Capital and his tax returns. And it appears to be working. Romney’s favorable rating dropped six percentage points since last month and now sits at 46 percent, down from 52 percent in mid-July. At the same time his unfavorable rating went up five points. Romney’s favorable rating has held steady among his party faithful, but it’s down eight percentage points among independents and seven points among Democrats.

“I remember him [Romney] for sure, but I don’t think we had any particular connections, I knew him and he knew me, I suppose.”~Bibi Netanyahu, July 2012 in Vanity Fair Interview, (middle of Page 4)

But, to hear the pathological liar, Mitt Romney, tell it the two were as thick as thieves (no pun intended) while they both worked at Bain Consulting Group in the 1970s (not to be confused with Bain Capital.)

Romney to the New York Times:

ROMNEY: “We [Mitt & Netanyahu] can almost speak in shorthand. We share common experiences and have a perspective and underpinning which is similar.”

In December GOP Debate regarding how America should handle Iran:

ROMNEY: “I’d get on the phone to my friend Bibi Netanyahu and say, ‘Would it help if I said this? What would you like me to do?'”

Sounds like Romney would put Bibi First and America Second and that is very disturbing to me.

In April 2012, Romney said:

ROMNEY: “Israel’s current prime minister is not just a friend, he’s an old friend”

Romney has touted his ‘friendship’ with Netanyahu as being “nurtured through meals in Boston, New York and Jerusalem.”

Look, it’s no surprise that Romney is a pathological liar and is lying about his “friendship” with Bibi to garner the Jewish vote — duh — But I would urge all my Jewish friends to remember that no one, of any religion or non-religion, can believe a thing that comes out of Romney’s mouth because he lies like a smelly old, nasty rug.

I would also remind my friends that Romney has hired most of Bush/Cheney Advisors and he, and they, have been chanting on and on about starting a war with Iran and ignorantly and falsely accusing Russia of still being the “Soviet Union” and also ignorantly thinking the world is still fighting the Cold War.

Mitt Romney has no Foreign Policy as his alleged Foreign Policy is exactly what the Bush/Cheney Advisors tell him it is — with no thoughts of his own and no core beliefs — Mitt just lies to the world about everything, including but not limited to, his fake, make-believe longtime close friendship with Bibi Netanyahu.

According to a new study, the world’s super-rich are shielding at least $21 trillion in secret offshore tax havens. Using data from the Bank of International Settlements, IMF, World Bank, and national governments, the Tax Justice Network found that an astonishing 100,000 people worldwide hold nearly $10 trillion of offshore wealth, equivalent to the size of the Chinese economy. According to the study:

1. Big banks manage the wealth. The three private banks handling the most assets offshore are UBS, Credit Suisse, and Goldman Sachs.

2. Offshore wealth is creating a global economic “black hole.” If the $21 trillion in offshore earned a conservatively-estimated 3 percent rate of return, and that income was taxed at just 30 percent, this would generate tax revenues of nearly $200 billion — roughly twice the amount OECD countries spend on international development assistance.

3. High impact on developing countries. In the 139 developing countries highlighted in the report, the richest citizens had amassed $7.3 to $9.3 trillion of unrecorded offshore wealth that is beyond the reach of local tax authorities. The report reveals that many developing “debtor” countries are actually quite wealthy, but the money is held by a few individuals.

4. Huge tax haven growth in the last few years. In 2005, the world’s top 50 banks managed $5.4 trillion in offshore money. By the end of 2010, the figure is over $12 trillion, representing an average annual growth rate of more than 16 percent.

This tax avoidance study comes at a time when many are questioning presidential hopeful Mitt Romney’s use of tax havens. As an executive at Bain Capital, Romney routed investmentsthrough companies in Bermuda or the Cayman Islands to allow investors to avoid U.S. taxes.

Team Romney tries to explain how he was technically the CEO of Bain Capital for much longer than previously stated, but its story only further muddies the waters

Under attack from President Obama’s re-election campaign, Mitt Romney has been forced to defend and clarify his tenure at Bain Capital, the private equity firm he founded. This weekend, a top aide, Ed Gillespie, claimed that Romney “retroactively retired” from Bain in 1999, even though SEC documents show that Romney was the CEO of Bain through 2002. Romney’s departure date is considered important because Bain, which made huge profits buying out other companies, has been accused of forcing its properties to lay off workers and outsource jobs between 1999 and 2002. Romney claims he made no day-to-day decisions at Bain after 1999, but new reports continue to surface suggesting that Romney did indeed maintain ties to the company. Here, 4 takeaways from Romney’s efforts to defuse this increasingly compromising issue:

2. Romney is coming off as slippery
“Retroactive” may technically be the “correct way to characterize Romney’s retirement,” since the campaign claims that his involvement in the 1999 Salt Lake City Winter Olympics evolved from a temporary leave of absence to a full-time job, says Steve Kornacki at Salon. But politically, the phrase is “slippery and comically legalistic, sort of like Bill Clinton expounding on the meaning of the word ‘is,’ or John Kerry explaining how he ‘actually did vote for the $87 billion before I voted against it.'” The line “could encourage casual voters who know little or nothing of the Bain story to assume that Romney is trying to cover his tracks for something embarrassing.”

3. Romney supported outsourcing before 1999
Bain was a pioneer in the outsourcing trend well before 1999, says Alec MacGillis at The New Republic. The layoffs and actual outsourcing may have occurred after his “retroactive” departure, but “for many of the investments in question the line traces very definitely to the pre-’99 period.” Indeed, Bain invested “heavily in firms that did not simply send some jobs overseas but specialized in offshoring.” In this respect, it really doesn’t matter whether Romney left Bain in 1999 or 2002.

4. Romney must take responsibility for Bain
Romney should acknowledge that “Bain was in the business of making companies more efficient and profitable,” which sometimes necessarily led to downsizing and outsourcing, says David Frum at CNN. It may not be pretty, but “it’s precisely the relentless search for profitability that causes economies to grow in the first place.” It’s an argument that “is not only convincing but has the additional merit of being true,” and it’s certainly better than letting Gillespie and other aides blast his “own side with lethal friendly fire.”

DRIP DRIP DRIP – Bloomberg’s title is spot on. It goes on to say, in essence, that Romney’s type of business experience doesn’t equate to the type of management skills needed to be President of the United States.

Mitt Romney touts his business acumen and job-creation record as a key qualification for being the next U.S. president.What’s clear from a review of the public record during his management of the private-equity firm Bain Capital from 1985 to 1999 is that Romney was fabulously successful in generating high returns for its investors. He did so, in large part, through heavy use of tax-deductible debt, usually to finance outsized dividends for the firm’s partners and investors.

When some of the investments went bad, workers and creditors felt most of the pain.

What’s less clear is how his skills are relevant to the job of overseeing the U.S. economy, strengthening competitiveness and looking out for the welfare of the general public, especially the middle class.Thanks to leverage, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy.

It’s worth examining some of them to understand Romney’s investment style at Bain Capital.

(Anthony Luzzatto Gardner works at Palamon Capital Partners, a private equity fund based in London, and was director of European affairs in the U.S. National Security Council in 1994-95. The opinions expressed are his.